Doing Nothing May Be Obama’s Best Option with New Medicare Board

By Matt Barry
Feb. 12 (Bloomberg) — There’s an interesting fact about the Affordable Care Act’s “death panel” that Mitt Romney, Sarah Palin and countless other Republicans have criticized: it doesn’t have any members.
The Affordable Care Act established the Independent Payment Advisory Board to develop recommendations to cut Medicare spending if it grows faster than anticipated. The law makes it difficult for Congress to block the board’s actions, and legislative efforts to repeal the board have yet to succeed.
However, Obama hasn’t appointed any of the board’s 15 members, even though Medicare’s actuaries are due to make their first determinations on whether the board needs to act by April 30. Critics of the board may view this situation and conclude that cuts can’t occur if there’s nobody there to propose them. That’s actually not the case. If there aren’t any board members, then responsibility for proposing the cuts simply shifts to Kathleen Sebelius, Obama’s health secretary.
In a new Bloomberg Government study, analyst Brian Rye finds that if cuts become the responsibility of the Obama administration instead of the board, then drug makers may bear the brunt of any required cuts. Unlike hospitals, drugmakers weren’t exempted from the board’s reach.
Rye found that in both Obama’s 2011 deficit-reduction proposal and his 2013 budget request, the president recommended that drug companies absorb more than half of his proposed Medicare cuts through higher rebates, even though spending on drugs accounts for less than 15 percent of overall Medicare spending. So if Obama wants his own proposals to be implemented, probably the most effective thing he can do regarding the Medicare board’s membership is … nothing.
To learn more about Bloomberg Government, visit bgov.com.